Several clinical observations have shown that Bacillus Calmette-Guérin (BCG) vaccine has beneficial impact on patients suffering from different chronic inflammatory diseases. Here we evaluated whether BCG inactivated by Extended Freeze-Drying (EFD) which circumvents all the side effects linked to the live bacteria, could influence the development of experimental autoimmune encephalomyelitis (EAE), a mouse model for Multiple Sclerosis. EFD BCG strongly attenuates inflammation, both systemically and at the central nervous system (CNS) level, alleviating EAE. Mechanistically, EFD BCG directly impacts the phenotype of plasmacytoid dendritic cells (pDCs), and promotes their ability to induce suppressive IL-10 secreting regulatory T cells (Tregs) that inhibit encephalitogenic CD4+ T cells. When co-cultured with human allogenic naive CD4+ T cells, EFD BCG exposed human pDCs similarly induce the differentiation of IL-10 producing Tregs. Our study provides evidence that EFD BCG could be used as an immunomodulator of encephalitogenic T cells in multiple sclerosis patients.